Global hop marketA local alternative to mass beer suggested by independent brewers has been successful and is now altering the global market. Beer is becoming more diversified, so transnational companies have to accept the new game rules and to switch focus to young and fast growing markets. All these processes increased the demand for aroma and bitter hop as well as their acreage expansion on two continents. However now there appeared a downward trend of alcohol consumption in the world, so even special sorts can soon turn to be sufficient. In this connection the dynamic American hop market is already facing some problems. EU hop producers have become more cautious, they are not racing to exceed the demand and look forward with more confidence, judging by the contract terms.
Hop Market in RussiaGermany still dominates the Russian market, yet over the recent two years one has been able observe a continuous success of Czech hop suppliers. Their expansion and growing popularity of hops from the United States became the drivers of supplies growth in 2016 despite the preceding modest harvest crop in the EU, as well as the factor of relative stability in 2017. In this connection, in 2017, the ratio of the varieties continued to shift towards the aroma ones, and the supplies of Magnum hop and other alpha varieties were reduced. However, the import of bitter hop pellets is partially replaced by extracts, especially from the major beer manufacturers. Total volumes of alpha acid supplies, according to our estimation, decreased by approximately 5% and returned to the level of 2015. Barth Haas Group continues dominating the hop products market; HVG also increased its weight. At the same time, Morris Hanbury significantly reduced the supplies in 2017.
10+1 trends of Russian beer market 2015-2017Despite of the moderately negative prognoses for 2017, the beer market can be stabilized soon. Yet the years of the negative dynamics have resulted in marketing being limited just to “optimization” and the art of balancing between price and volumes. Bigger supermarkets share means stronger trade marketing. These processes are connected to the majority of the described trends. At the same time, the federal brands inflation leads to searching for new tastes, sales channels and contact formats that expand the product range and diversify the beer market, but do not imply a substantial volume increase. Let us enumerate and further discuss the ten trends of the beer market we can see in 2015-2017 as well as the major event of 2017.
Beer market of Ukraine 2017In the first half of 2017, the Ukrainian beer market goes on decreasing slowly. Yet, the companies manage to compensate their lost volumes by raising prices and improving the sales structures. This results in the mid price market segment reduction while the sales of premium brands are rising. These processes are connected to position strengthening of companies Carlsberg Group and Oasis and the market share reduction of Obolon. Most of the novelties by the market leaders belong to craft or hard lemon categories.
Beer market of Russia 2016: PET goes to draftThe beer market of Russia was warmed up by the hot summer, but the preparation for large volume PET prohibition has already impacted it negatively. The year was successful for Efes, MBC and regional producers; Carlsberg’s positions were virtually stable but AB InBev and Heineken lost a part of market share having focused on the sales profitability. The dynamics of big brands was determined by how much the companies were willing to keep the prices down or by their promotional activity. In this context the economy segment of the beer market and sales of inexpensive draft beer were increasing. The premium segment started shrinking due to license brands migrating to the mainstream segment.
A new Vietnamese consumer is emerging…
There are different types of consumers in the Vietnamese market. On the left there is traditional Vietnam, countryside 50 km of Ho Chi Minh city. On the right you have a picture of Ho Chi Minh city, vibrant, with sophisticated consumers, modern. And this picture could have been taken in any urban center in the world. What you see, is rising middle class with the same trends that you see across the globe.
Individualization, even if it is an Asian country, where being together, the link between the generations is extremely important, you see that the new generation is more individual than the previous one.
You see a lot of regional differences of the consumers’ behavior of Ho Chi Minh and other big provincial cities Da Nang, Nha Trang and even My Tcho when you compare to other secondary cities or even rural Vietnam.
What you see appearing, both in an urban center or rural areas consumers are paying more attention to health. Health is definitely important for them.
There is also rise of convenience, especially Ho Chi Minh city, may be you have seen it, when you landed in the airport, a lot of convenience stores, for the time being we see it mostly in Hanoi, but this phenomenon is growing and growing.
The last but not least, Vietnam is extremely digitally savvy. Consumers are really connected to the internet, Facebook is big but not only Facebook, all digital connections matter a lot. Much more than you could expect from an emerging market.
The premium segment in Vietnam is growing, growing rapidly. On that VBL is really well positioned with our premium portfolio to tap into this premiumization
At the same time the mainstream accounts for 71% of the total market that is why broadening our strategy is critical for maintaining the momentum of growth we have developed at VBL.
Also even if off-trade remains dominant, we see growing strategy of on-trade, which is to a certain extent linked to the growth of convenience. But in the both segments VBL is actively developing strategies, both in on and off premise.
In terms of pack types, it is interesting to see that the biggest pack type is bottle indeed it is a returnable material, so it is predominantly drunk in the on trade sector. But can has a unique perception in Vietnam compared to the rest of the world. Can in Vietnam is perceived as more premium, and the price for consumers in can is higher than the same brand in bottle.
What you see appearing in the bottle segment is that the share of the small bottle of 330 or 350 mln is growing whereas the big volume brands of 450/640 ml are declining.
And in the both pack segments, so the can and small bottle, VBL is indeed growing on over indexing versus competition, so we are going faster in the premium segment which growing and we are going faster in the small bottle and can segments.
17 May. 2016